Santana Rey created Business Solution s on October 1, 2020. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2020. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. Number Account Title Debit Credit 101 Cash $ 48,542 106. 1 Alex’s Engineering Company 0 106. 2 Wildcat Services 0 106. 3 Easy Leasing 0 106. 4 IFM Company 3,100 106. 5 Liu Corporation 0 106. 6 Gomez Company 2,748 106. 7 Delta Company 0 106. 8 KC, Incorporated 0 106. 9 Dream, Incorporated 0 119 Merchandise inventory 0 126 Computer supplies 750 128 Prepaid insurance 1,854 131 Prepaid rent 835 163 Office equipment 8,130 164 Accumulated depreciation—Office equipment $ 370 167 Computer equipment 20,600 168 Accumulated depreciation—Computer equipment 1,110 201 Accounts payable 1,200 210 Wages payable 660 236 Unearned computer services revenue 1,500 307 Common stock 74,059 318 Retained earnings 7,660 319 Dividends 0 403 Computer services revenue 0 413 Sales 0 414 Sales returns and allowances 0 415 Sales discounts 0 502 Cost of goods sold 0 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 0 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 0 676 Mileage expense 0 677 Miscellaneous expenses 0 684 Repairs expense—Computer 0 In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Its transactions for January through March follow. January 4 The company paid cash to Lyn Addie for five days’ work at the rate of $165 per day. Four of the five days relate to wages payable that were accrued in the prior year. January 5 Santana Rey invested an additional $23,300 cash in the company in exchange for more common stock. January 7 The company purchased $7,500 of merchandise from Kansas Corporation with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. January 9 The company received $2,748 cash from Gomez Company as full payment on its account. January 11 The company completed a five-day project for Alex’s Engineering Company and billed it $5,330, which is the total price of $6,830 less the advance payment of $1,500. The company debited Unearned Comput.

1. Santana Rey created Business
Solution
s on October 1, 2020. The company has been
successful, and its list of customers has grown. To
accommodate the growth, the accounting
system is modified to set up separate accounts for each
customer. The following chart of
accounts includes the account number used for each account and
any balance as of
December 31, 2020. Santana Rey decided to add a fourth digit
with a decimal point to the
106 account number that had been used for the single Accounts
Receivable account. This
change allows the company to continue using the existing chart
of accounts.
Number Account Title Debit Credit
101 Cash $ 48,542

2. 106.
1
Alex’s Engineering Company 0
106.
2
Wildcat Services 0
106.
3
Easy Leasing 0
106.
4
IFM Company 3,100
106.
5
Liu Corporation 0

3. 106.
6
Gomez Company 2,748
106.
7
Delta Company 0
106.
8
KC, Incorporated 0
106.
9
Dream, Incorporated 0
119 Merchandise inventory 0
126 Computer supplies 750

4. 128 Prepaid insurance 1,854
131 Prepaid rent 835
163 Office equipment 8,130
164
Accumulated depreciation—Office
equipment
$ 370
167 Computer equipment 20,600
168
Accumulated depreciation—Computer
equipment
1,110
201 Accounts payable 1,200
210 Wages payable 660

5. 236 Unearned computer services revenue 1,500
307 Common stock 74,059
318 Retained earnings 7,660
319 Dividends 0
403 Computer services revenue 0
413 Sales 0
414 Sales returns and allowances 0
415 Sales discounts 0
502 Cost of goods sold 0
612 Depreciation expense—Office equipment 0
613 Depreciation expense—Computer equipment 0
623 Wages expense 0

6. 637 Insurance expense 0
640 Rent expense 0
652 Computer supplies expense 0
655 Advertising expense 0
676 Mileage expense 0
677 Miscellaneous expenses 0
684 Repairs expense—Computer 0
In response to requests from customers, S. Rey will begin
selling computer software. The
company will extend credit terms of 1/10, n/30, FOB shipping
point, to all customers who
purchase this merchandise. However, no cash discount is
available on consulting fees.
Additional accounts (Nos. 119, 413, 414, 415, and 502) are
added to its general ledger to

7. accommodate the company’s new merchandising activities. Its
transactions for January
through March follow.
January 4 The company paid cash to Lyn Addie for five days’
work
at the rate of $165 per day. Four of the five days
relate to wages payable that were accrued in the prior
year.
January 5 Santana Rey invested an additional $23,300 cash in
the
company in exchange for more common stock.
January 7 The company purchased $7,500 of merchandise from
Kansas
Corporation with terms of 1/10, n/30, FOB shipping
point, invoice dated January 7.
January 9 The company received $2,748 cash from Gomez
Company as
full payment on its account.
January
11

8. The company completed a five-day project for Alex’s
Engineering Company and billed it $5,330, which is the
total price of $6,830 less the advance payment of
$1,500. The company debited Unearned Computer Services
Revenue for $1,500.
January
13
The company sold merchandise with a retail value of
$4,800 and a cost of $3,410 to Liu Corporation, invoice
dated January 13.
January
15
The company paid $650 cash for freight charges on the
merchandise purchased on January 7.
January
16

9. The company received $4,110 cash from Delta Company for
computer services provided.
January
17
The company paid Kansas Corporation for the invoice
dated January 7, net of the discount.
January
20
The company gave a price reduction (allowance) of $700
to Liu Corporation and credited Liu's accounts
receivable for that amount.
January
22
The company received the balance due from Liu
Corporation, net of the discount and the allowance.
January
24

10. The company returned defective merchandise to Kansas
Corporation and accepted a credit against future
purchases (debited accounts payable). The defective
merchandise invoice cost, net of the discount, was $476.
January
26
The company purchased $9,800 of merchandise from Kansas
Corporation with terms of 1/10, n/30, FOB destination,
invoice dated January 26.
January
26
The company sold merchandise with a $4,580 cost for
$5,960 on credit to KC, Incorporated, invoice dated
January 26.
January
31
The company paid cash to Lyn Addie for 10 days’ work at
$165 per day.

11. February
1
The company paid $2,505 cash to Hillside Mall for
another three months’ rent in advance.
February
3
The company paid Kansas Corporation for the balance due,
net of the cash discount, less the $476 credit from
merchandise returned on January 24.
February
5
The company paid $420 cash to Facebook for an
advertisement to appear on February 5 only.
February
11
The company received the balance due from Alex’s
Engineering Company for fees billed on January 11.
February

12. 15
The company paid a $4,610 cash dividend.
February
23
The company sold merchandise with a $2,480 cost for
$3,300 on credit to Delta Company, invoice dated
February 23.
February
26
The company paid cash to Lyn Addie for eight days’ work
at $165 per day.
February
27
The company reimbursed Santana Rey $224 cash for
business automobile mileage. The company recorded the
reimbursement as "Mileage Expense."
March 8 The company purchased $2,810 of computer supplies

13. from
Harris Office Products on credit with terms of n/30, FOB
destination, invoice dated March 8.
March 9 The company received the balance due from Delta
Company
for merchandise sold on February 23.
March 11 The company paid $920 cash for minor repairs to the
company’s computer.
March 16 The company received $5,460 cash from Dream,
Incorporated, for computing services provided.
March 19 The company paid the full amount due of $4,010 to
Harris
Office Products, consisting of amounts created on
December 15 (of $1,200) and March 8.
March 24 The company billed Easy Leasing for $9,057 of
computing
services provided.

14. March 25 The company sold merchandise with a $2,162 cost for
$2,950 on credit to Wildcat Services, invoice dated
March 25.
March 30 The company sold merchandise with a $1,208 cost for
$2,270 on credit to IFM Company, invoice dated March 30.
March 31 The company reimbursed Santana Rey $96 cash for
business
automobile mileage. The company recorded the
reimbursement as "Mileage Expense."
The following additional facts are available for preparing
adjustments on March 31 prior to
financial statement preparation.
a. The March 31 amount of computer supplies still available
totals $2,145.
b. Prepaid Insurance coverage of $618 expired during this three-
month period.
c. Lyn Addie has not been paid for seven days of work at the
rate of $165 per day.
d. Prepaid rent of $2,505 expired during this three-month
period.
e. Depreciation on the computer equipment for January 1

15. through March 31 is $1,110.
f. Depreciation on the office equipment for January 1 through
March 31 is $370.
g. The March 31 amount of merchandise inventory still
available totals $624.